US - California lawmakers approved two bills to prevent government employees from increasing the amount of their pensions by padding their pay before retirement.
The measures prohibit state and municipal employees from pushing up their final-year salary before retirement by cashing out vacation time or administrative leave or through an end-of- career bonus. Governor Arnold Schwarzenegger (pictured) has criticized the practice, known as pension spiking. The bills go to him next.
(Yesterday's) passage of the bills to hold down public pension payments comes as the costs rise to provide the benefits. The California Public Employees' Retirement System, the largest public pension in the U.S. with $205bn in assets, in May said the state would have to pay $600m more this fiscal year to cover retirement costs for government workers.
Passage also comes amid a public uproar over the salaries paid to officials in the Los Angeles suburb of Bell, where the former city manager got almost $800,000 a year and part-time city councilors took home almost $100,000 annually, mostly by serving on boards and commissions.
"Pension spiking does a disservice to the public, who ultimately foots the bill," Senator Joe Simitian, a Democrat from Palo Alto who helped write one of the bills, said in a statement. The practice "does a disservice to other public employees who rely on the resources and solvency of the system for a secure retirement," he said.
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